BQS303 BRE 212


Group 6
Case Study : Gateway

Chief Makes Daring Decisions

Read the case shown below and answer the questions that follow. Studying this case will help
you better understand how decision-making concepts can be applied in a company like Gateway.
Bill Gates, Michael Dell, and  Ted Waitt? Like Gates and Dell, Waitt left college to form a
computer company, Gateway. He and Mike Hammond, now senior vice president of
manufacturing, started the firm in a farmhouse with a loan secured by a $10,000 CD owned by
Waitt’s grandmother. Initially, they sold hardware peripherals and software to owners of PCs
made by Texas Instruments; later they expanded into designing and assembling their own fully
configured PC systems for direct sale to consumers and businesses.
As his company grew, Waitt used his Midwestern roots to differentiate the South Dakota–based
company from competitors such as Dell and Hewlett-Packard. For example, he used eyecatching cow spots to establish a brand image, which can be quite difficult in the standardized
computer industry. Every Gateway computer came packed inside a white box with cow-like
black spots, and the company served cow-shaped cookies at its annual shareholder meetings. By
1998, the company was reporting net income of $346 million on $7.5 billion in annual revenues.
However, to sustain the company’s extraordinary growth during the coming years, Waitt realized
that changes were needed. First, he decided to relocate the top management team to new
administrative headquarters in San Diego. Not only would this help Gateway attract top talent, it
would bring the office closer to Silicon Valley partners and suppliers. Waitt also decided to
reduce the company’s reliance on the cow motif as he courted business customers, who might
not see a clear connection between high-quality computers and cows. Gateway’s growth roared
on and by 2000, the company...

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